Oil prices were relatively quiet this week

FRO 18.01.2019 kl 21:52 1186

Friday, January 18, 2019

Oil prices were relatively quiet this week, bouncing around, but closed out the week on a positive note.

IEA: Balancing oil market will be a “marathon.” The IEA said in its latest Oil Market Report that “the journey to a balanced market will take time, and is more likely to be a marathon than a sprint.” The agency noted that while Saudi Arabia seems determined to follow through, there is “less clarity” on Russia. The agency left its demand growth forecast unchanged, arguing that while the global economy is starting to show some worrying signs, lower oil prices will also help keep demand aloft.

OPEC’s December production down 751,000 bpd. OPEC released its monthly Oil Market Report on Thursday, revealing a roughly 751,000 bpd decline, according to secondary sources. Saudi Arabia slashed output by 468,000 bpd, Iran lost 159,000 bpd, and Libya lost 172,000 bpd. Smaller cuts came from the UAE (-65,000 bpd) and involuntary losses from Venezuela (-33,000 bpd). The largest gain come from Iraq, which added 88,000 bpd. The monthly totals occurred before implementation of the OPEC+ agreement, which calls for cuts of 1.2 mb/d from October’s baseline.

EIA: Brent to average $61. The EIA forecasts a $61-per-barrel price for Brent for 2019, with WTI averaging $8 below Brent in the first quarter, a discount that will narrow to a smaller $4-per-barrel markdown by the fourth quarter. The agency maintained a forecast for U.S. oil production at 12.1 mb/d this year, unchanged from prior estimates even though it has lowered its pricing forecast.

U.S. Trade Representative: No progress on U.S.-China trade talks. U.S. Trade Representative Robert Lighthizer did not see any progress on the structural trade issues during negotiations earlier this month. The two sides will resume negotiations at the end of January.


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OPEC considers influence campaign in U.S. OPEC is considering a PR campaign in the U.S. to head off punitive measures in Congress, according to the Wall Street Journal. The influence campaign would be the cartel’s first, and it would consist of funneling money through “industry organizations, think tanks, academics and other opinion makers,” according to WSJ. OPEC is concerned mostly about anti-trust regulation that has been gaining support on Congress.

Gasoline glut in Asia. Global refineries are churning out ever-increasing volumes of gasoline as refiners chase higher margins for diesel. Meanwhile, a startup of new refineries in Asia with a focus on producing naptha for petrochemicals could also exacerbate the gasoline glut.

U.S. natural gas supply and demand breaking records. U.S. natural gas supply is expected to soar to an all-time record high of 90 billion cubic feet per day in 2019, according to the EIA. That’s up sharply from a record high in 2018 at 83.31 bcf/d. Demand will also hit a record high this year at 82.65 bcf/d.

Offshore spending to outgrow onshore in 2019. Offshore spending will outpace onshore shale spending this year. This will benefit oilfield services companies that are “exposed to the offshore subsea market and the maintenance, modifications and operations (MMO) sector,” according to Rystad Energy. “Many would expect offshore spending to be cut as drastically as shale, but offshore budgets were at a 10-year low last year, after four years of intense cost focus, and from that level you don’t need much additional activity or inflation to drive up the market,” Rystad Energy head of oilfield services research Audun Martinsen said.

Libyan National Army launches assault for Sharara field. The Libyan National Army (LNA), led by General Khalifa Haftar, launched an assault on January 15 to secure the El Sharara oil field, the country’s largest, which has a capacity of 300,000 bpd. The field has been offline since December. “Should the LNA succeed in taking over the El Sharara facilities, Haftar’s control over Libya’s strategically vital oil and gas resources would be hugely strengthened,” Verisk Maplecroft wrote in a note. “This, in turn, would shore up Haftar’s bargaining position in ongoing negotiations with the Government of National Accord.” Moreover, if the LNA does succeed, it also increases the odds of a rerun of the standoff with the internationally-recognized government in Tripoli, just as last year. In 2018, a significant portion of Libya’s oil went offline when the two sides fought over control of the nations’ oil export terminals.

Hedge funds closed after booking losses trading oil and gas. Nearly 100 energy-focused hedge funds closed from 2016 through September 2018, taking the total number down to 738, according to Reuters and Eurekahedge. That is the lowest number of active hedge funds focused on energy since 2010. “There is a massive decline in the number of funds, and no replacements,” David Mooney, founder of Casement Capital, told Reuters. “There has been a near ‘extinction event’ in commodities hedge funds.”

Tesla to lay off 7 percent of workforce. Tesla (NASDAQ: TSLA) said it would lay off 7 percent of its workforce in order to cut costs. That would allow the company to sell its Model 3 at a lower price as subsidies phase out.

China looks to expand oil deal in Iran. Despite the looming expiration of sanctions waivers on Iran in the coming months, China hopes to expand its operations in Iran, according to the Wall Street Journal. Sinopec is reportedly making stiff demands to Iran, knowing the country has few other options. Sinopec believes its operations fall under an existing contract, which would allow it to continue even if U.S. sanctions waivers expire.

Thanks for reading and we’ll see you next week.
18.01.2019 kl 21:55 1174

How The Transport Industry Is Shaping Oil Demand
It has been a bad start to the year for UK car manufacturing. Iconic UK-based automaker Jaguar Land Rover (JLR) announced job cuts of up to 5,000 from its UK workforce of 40,000, while Ford Europe unveiled a major cost-cutting review of its European operations.

It would be easy to blame Brexit, but this is not what is driving change. It is the slowdown in Chinese orders and falling consumer interest in diesel engine vehicles.

Both JLR and Ford are looking towards transformative reorganizations for a future in which electric cars rather than diesel engines are the name of the game. While JLR will cut jobs in the UK, it will still build a new factory in Warwickshire to produce batteries, and its electric motors will be manufactured at its site in Wolverhampton.

According to a Reuters survey published January 10, automakers globally will invest $300 billion in electric vehicles (EVs) over the next 5 to 10 years, 45% of which will be in China, with 46% of the investment capital emanating from Germany.

It is evidence of the tectonic forces impacting the transportation sector, which accounts for just over 60% of oil demand. According to a recent report from energy consultants Wood Mackenzie, oil demand from transport will level out around 2030, leaving petrochemicals as the main, perhaps solitary, engine of growth.

Diesel crunch

With the International Maritime Organisation’s new rules on sulfur in marine fuel now less than a year away, diesel is likely to gain ground as a fuel of the high seas, leaving land transport increasingly to gasoline, electricity and LNG.

In 2017, gasoline car sales rose 3% globally, while sales of diesel engine cars and light commercial vehicles dropped 3.7%, a trend which preliminary data suggests continued in 2018. In Europe, where two in every three diesel cars are sold, the market share of diesel engines fell to 36.5% in first-half 2018 for the EU, down from 42.5% in the same period in 2017. Diesel engine sales plummeted 16%.

China’s latest car sales data reinforce the changing structure of vehicle fleets. Chinese auto sales dropped 6% in 2018 to 22.7 million units, the first annual decline in new sales in 20 years in what is the world’s biggest car market. However, sales of New Energy Vehicles (NEVs) jumped from about 780,000 in 2017 to over 1 million last year, with the China Association of Automobile Manufacturers forecasting NEV sales of 1.6 million units in 2019 even as overall auto sales remain flat or fall further.

The slowdown in Chinese autos sales in tandem with booming NEV purchases means the green slice of the pie is getting bigger, quicker.

Global EV sales

While China is the epicenter of the electric mobility revolution, globally EV sales had another strong year. Final year-end data is not yet available in key markets, but EV data specialists EV Volumes currently estimate passenger EV sales worldwide in 2018 at about 2.17 million, up from 1.28 million in 2017, bringing the cumulative number of light-duty passenger EVs on the world’s roads to 5.47 million, 65% of them battery-only vehicles (BEVs).

Electric commercial vehicles and buses grew by 155,000 last year, according to EV Volumes estimates, compared with 148,000 in 2017. The estimates for e-HDVs may be subject to more revision than those for light-duty EVs.

Steady rather than spectacular growth, but this is an industry still tooling up. E-bus sales expanded markedly in Europe and India last year after a strong 2017, suggesting the sector is gradually breaking out of its Chinese stronghold. The cumulative number of e-Heavy Duty Vehicles (e-HDVs) on the world’s roads now amounts to an estimated 667,000, 86% of them BEVs.

Oil demand displacement

The numbers for oil demand displacement are beginning to mount as a result. The 5.47 million passenger car EVs account for about 110,000 b/d of unrealized oil demand, and e-HDVs, assuming about 15% are light-duty commercial vehicles, 241,000 b/d, bringing the global total to 351,000 b/d.

Most of this displacement is in China, which builds and hosts the majority of e-HDVs, as well as about half the world’s passenger EVs.

China also has a steadily growing fleet of LNG-fuelled trucks. 96,000 were produced in 2017 up from 19,600 in 2016 and the momentum is unlikely to have stalled last year, suggesting the total fleet may be approaching 340,000. This would displace about 285,000 b/d of diesel demand. According to Shenzhen’s clean energy transportation association, natural gas vehicles save RMB 2,500 to 3,000 ($370-$443) each month compared with diesel vehicles.

But even these numbers omit a major dimension to the changes in Chinese transportation – the explosion over the last decade and a half of electric bicycle and scooter ownership. By 2015, the number of electric two-wheelers in China had reached 200 million, with the vehicle population expected to grow by about 6.7% a year through 2020, suggesting that at end-2018 the number had reached about 244 million.

This is almost entirely a Chinese phenomenon, resulting from early city bans on gasoline motorbikes to improve air quality. In 2015, 85% of the world’s electric two-wheelers were in China, according to Frost and Sullivan. By 2010, well ahead of significant electric car growth, there were 114 million electric two-wheelers on China’s streets, going some way to explaining the country’s rapid adoption of EVs both in terms of industrial production and consumer acceptance.

The majority of electric two-wheelers run on lead-acid batteries although lithium-ion technology is gaining ground. These vehicles are cheap to buy and run. They are used in place of walking, cycling and bus or other mass transit options, but are also a major and growing means of commuting and light-weight urban goods delivery in China’s congested metropoles -- further evidence that the options for meeting transport demand are increasingly less oil intensive.
22.01.2019 kl 11:35 629

Alt ligger til rette for at FRO spretter opp mot kr 60 (kanskje alt denne uken) og deretter videre mot kr 90-100?
Nå skal nok FRO reprises fremover. Dagens oppgang er nok bare starten og slutt i dag mellom kr 53-54?